Project Management
Class 2: 1/19/11
3-2
OBJECTIVES
 Definition
of Project Management
 Work Breakdown Structure
 Project Control Charts
 Structuring Projects
 Critical Path Scheduling
3-3
PROJECT EXAMPLES
 Building:
a ship, a satellite, an oil rig,
and a nuclear plant.
 Developing:
computer programs, an
advertising campaign, a new product, a
new process, and training materials.
 Implementing:
new technologies and
work procedures.
3-4
Project Management
Defined
A
Project is a series of related jobs usually
directed toward some major output and
requiring a significant period of time to
perform
 Project Management are the management
activities of planning, directing, and
controlling resources (people, equipment,
material) to meet the technical, cost, and time
constraints of a project
3-5
OBJECTIVES OF A PROJECT
3-6
OBJECTIVES OF A PROJECT
The 4th
dimension:
client
satisfaction
3-7
PROJECT LIFE CYCLE
Project Life Cycle: changing patterns of resource
usage and level of activity over the course of the
project
3-8
PROJECT LIFE CYCLE

Stages of a Conventional Project:





Slow beginning
Buildup of size
Peak
Begin a decline
Termination
3-9
PROJECT LIFE CYCLE
3-10
PROJECT LIFE CYCLE
Time distribution of project effort is characterized by
slow-rapid-slow
3-11
PROJECT LIFE CYCLE
Try to avoid the “90-90 rule of project
management”:
The first 90% of the project
takes 90% of the time, the last
10% takes the other 90%.
3-12
PROJECT LIFE CYCLE
What does this rule really
mean?
3-13
PROJECT LIFE CYCLE

During the life cycle cycle, project management
is accomplished through the use of processes
such as:
Initiating, planning, executing, controlling, and
closing
 Many of these processes are iterative in nature
because the project is being progressively elaborated

3-14
Defining Project Objectives
Why Set Project Objectives
 To
provide direction for project activities
 To enable measuring results against prior
exceptions
 Resource usage (manpower, materials,
etc.)


 To
Schedule integrity
Quality of work
determine specific goals which will
provide maximum effectiveness of project
activities
3-15
Defining Project Objectives
Requirements for Project Objectives
 Achievable
(time, resources, staff)
 Understandable (vs. complex)
 Specific (vs. general, vague statements)
 Tangible (“deliverables”)
 Measurable (resources, schedule, quality)
 Consistent (with strategy, programs,
policies, procedures)
 Assignable (department or individual)
3-16
Defining Project Objectives
Some Problems in Setting Objectives
 Stating
activities rather than
deliverables
 Exceeding the scope of the defined
project
 Failing to be specific
 Omitting important deliverables
 Inconsistency with stated policies
3-17
Defining Project Objectives
Example: D.U. Singer Project
Title: Permanent Antiseptic Production StartUp
 Objectives:


Develop a comprehensive plan for the production
of a new, permanent antiseptic
Complete development and testing of a
manufacturing process that:
Meets all current FDA, EPA, and OSHA regulations
as well as internal specifications
 produces 95% yield of product (full packaged) at a
level of 80% of full production goal of 10 million liters
per year

3-18
Be careful of the jargon!
3-19
Another problem in objective setting …
3-20
WORK BREAKDOWN STRUCTURE
A work breakdown structure defines the
hierarchy of project tasks, subtasks, and work
packages
Level Program
1
2
Project 1
Project 2
Task 1.1
Task 1.2
3
Subtask 1.1.1
4
Work Package 1.1.1.1
Subtask 1.1.2
Work Package 1.1.1.2
3-21
Work Breakdown Structure
Program: New Product Introduction
1.0
Project 1: Engineering Development
1.1 Task 1:
Run pilot test
1.2 Task 2:
Review process costs and
efficiencies
1.3 Task 3:
Prepare Capital Equipment
List
2.0
2.1
2.2
2.3
Project 2: Market Survey
Task 1:
Complete Market Survey
Task 2:
Analyze Survey Results
Task 3:
Prepare Marketing Plan
3-22
Work Breakdown Structure
3.0
Project 3: Manufacturing Start-up
3.1 Task 1:
Install and Test New Equipment
3.2 Task 2:
Establish Manufacturing
Procedures
3.3 Task 3:
Detailed Testing of Initial Output
4.0 Project 4: Sales Force Training
4.1 Task 1:
Select Sales People
4.2 Task 2:
Select Distributors
4.3 Task 3:
Train Sales Force and
Distributors
3-23
GANTT CHART
Vertical Axis:
Always Activities
or Jobs
Horizontal bars used to denote length
of time for each activity or job.
Activity 1
Activity 2
Activity 3
Activity 4
Activity 5
Activity 6
Time
Horizontal Axis: Always Time
3-24
SERVICE ACTIVITIES FOR A DELTA JET DURING A 60 MINUTE LAYOVER
3-25
NETWORK-PLANNING MODELS
A project is made up of a sequence of activities that
form a network representing a project
 The path taking longest time through this network
of activities is called the “critical path”
 The critical path provides a wide range of
scheduling information useful in managing a
project
 Critical Path Method (CPM) helps to identify the
critical path(s) in the project networks

3-26
PREREQUISITES FOR CRITICAL PATH METHODOLOGY
A project must have:
well-defined jobs or tasks whose
completion marks the end of the project;
independent jobs or tasks;
and tasks that follow a given sequence.
3-27
STEPS IN THE CPM METHOD



Activity Identification
Activity Sequencing and
Network Construction
Determine the critical path

From the critical path all of the project
and activity timing information can be
obtained
3-28
CPM EXAMPLE
Consider the following consulting project:
Activity
Assess customer's needs
Write and submit proposal
Obtain approval
Develop service vision and goals
Train employees
Quality improvement pilot groups
Write assessment report
Designation Immed. Pred. Time (Weeks)
A
None
2
B
A
1
C
B
1
D
C
2
E
C
5
F
D, E
5
G
F
1
Develop a critical path diagram and determine
the duration of the critical path and slack
times for all activities.
3-29
FIRST DRAW THE NETWORK
Act.
Imed. Pred. Time
A
None
2
B
A
1
C
B
1
D
C
2
E
C
5
F
D,E
5
G
F
1
A(2)
B(1)
D(2)
C(1)
F(5)
E(5)
G(1)
3-30
FIND THE CRITICAL PATH
 Activities
on the critical path cannot be
delayed without delaying the completion
of the project
 There are two paths:
A – B – C – D – F – G: 12 weeks
A – B – C – E – F – G: 15 weeks
 Activity D can be delayed by up to 3
weeks without delaying the project
 The longest path is critical – why?
3-31
DETERMINE EARLY STARTS AND EARLY FINISH TIMES
ES=4
EF=6
ES=0
EF=2
ES=2
EF=3
ES=3
EF=4
A(2)
B(1)
C(1)
Hint: Start with ES=0
and go forward in the
network from A to G.
D(2)
ES=4
EF=9
E(5)
ES=9
EF=14
ES=14
EF=15
F(5)
G(1)
3-32
DETERMINE LATE STARTS AND
LATE FINISH TIMES
ES=0
EF=2
ES=2
EF=3
ES=3
EF=4
A(2)
B(1)
C(1)
LS=0
LF=2
LS=2
LF=3
LS=3
LF=4
Hint: Start with LF=15
or the total time of the
ES=4 project and go
EF=6 backward in the
network from G to A.
D(2)
ES=9
ES=14
EF=14 EF=15
LS=7
LF=9
G(1)
F(5)
ES=4
EF=9
LS=9
LS=14
LF=14
LF=15
E(5)
LS=4
LF=9
3-33
CRITICAL PATH & SLACK
ES=4
EF=6
ES=0
EF=2
ES=2
EF=3
ES=3
EF=4
A(2)
B(1)
C(1)
LS=0
LF=2
LS=2
LF=3
LS=3
LF=4
D(2)
LS=7
LF=9
ES=4
EF=9
E(5)
LS=4
LF=9
Slack=(7-4)=(9-6)= 3 Wks
ES=9
EF=14
ES=14
EF=15
F(5)
G(1)
LS=9
LF=14
LS=14
LF=15
Duration=15 weeks
3-34
EXAMPLE 2: GREAT VALLEY HOSPITAL PROJECT
Activity
Description
Immed. Preds.
A
Build internal components
-
B
Modify roof and floor
-
C
Construct collection stack
A
D
Pour concrete and install
frame
A, B
E
Build high-temperature
burner
C
F
Install pollution control
system
C
G
Install air pollution device
D, E
H
Inspect and test
F, G
3-35
NETWORK FOR GREAT VALLEY HOSPITAL PROJECT
2
A
F
2
C
2
4
E
Start
3
B
4
D
3
H
5
G
3-36
CRITICAL PATH FOR GREAT VALLEY HOSPITAL PROJECT
F
A
C
E
Start
B
D
H
G
3-37
CRITICAL PATH FOR GREAT VALLEY HOSPITAL PROJECT

Four paths in the network:
Path 1: Start – A – C – F – H: 9 weeks
Path 2: Start – A – C – E – G – H: 15 weeks
Path 3: Start – A – D – G – H: 13 weeks
Path 4: Start – B – D – G – H: 14 weeks

Path 2 is critical
See GreatValley.mpp
3-38
CRITICAL PATH FOR GREAT VALLEY HOSPITAL PROJECT
 A,
C, E, G, and H are on the critical
path and so they have 0 slack
 B is on path 4, so its slack is 15 – 14
=1
 D is on paths 3 and 4, so its slack is
15 – Max (13,14) = 1
 F is on path 1, so its slack is 15 – 9 =
6
 An activity can be delayed by its
slack and not delay the project
completion
3-39
CRITICAL PATH ANALYSIS SETUP
Latest
Start
LS
Activity
Duration
ES
Activity
Name
Earliest
Start
EF
Earliest
Finish
LF
Latest
Finish
3-40
Critical Path Analysis for Great Valley Hospital Project
DETERMINE EARLY STARTS AND EARLY FINISH TIMES
A
0 H 2
0 A 2
2
Slack=0
0 HStart
0
0
0
0
BB
Start
0 H 3
4
1
3
Slack=1
C
2 H 4
2 C4
2
Slack=0
DD
3 H 7
8
4
4
Slack=1
FF
4 H 7
13
10
3
E
Slack=6
4 H
8
F
8
4
4
Slack=0 G
8 G
H 13
13
8
5
Slack=0
H
13 H 15
15
13
2
Slack=0
GREAT VALLEY GANTT CHART: EARLIEST START AND FINISH
Great Valley General Hospital
1 2 3 4 5 6 7 8 9 10 1112 13 1415 16
A Build internal components
B Modify roof and floor
C Construct collection stack
D Pour concrete and install
frame
E Build high-temperature
burner
F Install pollution control
system
G Install air pollution device
H Inspect and test
3-41
3-42
TIME-COST MODELS
 In
construction, incentives for completing
project early
 In new product development, revenue
stream starts earlier if project is launched
earlier
 Time-Cost Models:

To accelerate the completion of a project,
expedite or “crash” the critical path project
activity that has the cheapest cost per unit time
to shorten its duration
3-43
Steps in Time-Cost Analysis





Using normal activity times, find the critical path
Compute the crash cost per time period:
Crash cost/period = (Crash cost - Normal cost)/ (Normal
time - Crash time)
If there is only one critical path, select the activity on the
critical path that (a) can still be crashed, and (b) has the
smallest crash cost per period
If there are multiple critical paths, select the cheapest
crash cost combination of critical path activities that can
still be crashed that will reduce ALL critical paths by one
period
Update all activity times and repeat process if further
reduction in critical path time is desired
3-44
Example 3. Great Valley Hospital Project with Crashing
Act.
A
B
C
D
E
F
G
H
NT CT NC
CC
2 1 22,000 22,750
3 1 30,000 34,000
2 1 26,000 27,000
4 3 48,000 49,000
4 2 56,000 58,000
3 2 30,000 30,500
5 2 80,000 84,500
2 1 16,000 19,000
CC/WK
750
2000
1,000
1,000
1,000
500
1,500
3,000
CP?
Y
N
Y
N
Y
N
Y
Y
3-45
Example 3. Great Valley Hospital Project Crashing Analysis
 Select
the activity with smallest
crash cost per week that is on the
critical path – activity A at a cost of
$750
 Start – B – D – G – H is also critical
(14 wks)
 Crash G by 1 week at a cost of $1,500
to reduce the project by an additional
week (vs. crashing C and D at a
combined cost of $2,000)